Sabaf

Investor Presentation • May 26, 2020

FINANCIAL PRESENTATION

Table of contents

• I. COMPANY PROFILE
• II. 1ST QUARTER 2020 AND 2019 PERFORMANCE
• III. BUSINESS PLAN 2018 2022

COMPANY PROFILE

Sabaf Group – Timeline and history

Sabaf Group – Business diversification in three divisions

5

Gas division – Product range

Hinges division – Product range

Electronics division – Product range

Industrial Footprint

Total Group employees at 31 March 2020:

Market

Global leader

• in the segment of components for domestic gas cooking appliances, with over 400 customers in 55 different countries. A strong leadership in Europe (market share above 40%), estimated market share worldwide of about 10%
• in the segment of hinges with estimated market share worldwide of about 35%

Weight of top 10 customers on total Group sales is 47% (45% in 2018)

Each top 10 customer represents less than 8% of total Group sales

Long-term agreements and strong relationships with all the main players in the household appliances business, based on mutual trust, technical cooperation, co-engineering and tailor-made products

Product & technology

Product Innovation:

about 90 active patents

Know-how:

• ➢ Mechanic: forefront process technology - internal development of special machinery, high performance molds for robotic die-casting, high speed and high precision tools not available on the market
• ➢ Electronic: strong skills in new product development

Cost and quality leadership: highly automated plants and low incidence of direct labor, € 61 mn investments (8.8% of sales) in the past 5 years, to reinforce competitiveness and to ensure the highest quality standards

Strong operational leverage: great flexibility in production volumes growth, ready to satisfy customers requests

Intellectual capital: highly specialized and qualified staff (40+ R&D engineers)

Stock price and main shareholders

Market cap: € 113 mn at 22 May 2020

% OF SHARE CAPITAL

% OF VOTING RIGHTS

1ST QUARTER 2020 FINANCIAL PERFORMANCE

Operational impacts of health emergency

ITALIAN PLANTS

Production stop	3 weeks Production loss: on average 40% in March 2020 vs. March 2019
Work shifts	Initially 1 hour less, now ½ hour less
Temporary Redundancy Fund	Recourse to Temporary Redundancy Fund (Cassa Integrazione COVID) in all Italian Group companies

OTHER PLANTS

Sabaf Do Brasil, Sabaf Turkey and Okida Never stopped completely the production, even if a slowdown was needed due to the safety measures and absenteeism

DIRECT COSTS

€ 300,000 euro in April 2020 for the mangement of the health emergency

Performance data

Income statement

€ x 000	I Q 2020		I Q 2019*		Δ % 20 - 19	FY 2019*
Revenue	43,852	100.0%	37,635	100.0%	+16.5%	155,923	100.0%
Other income	1,049	2.4%	672	1.8%		3,621	2.3%
Total operatig revenue and income	44,901		38,307			159,544
Materials	(19,138)	(43.6%)	(14,279)	(37.9%)		(57,464)	(36.9%)
Personnel costs	(10,253)	(23.4%)	(8,860)	(23.5%)		(37,103)	(23.8%)
Change in inventories	(304)	(0.7%)	(1,265)	(3.4%)		(8,617)	(5.5%)
Other operating costs	(7,517)	(17.1%)	(7,286)	(19.4%)		(29,327)	(18.8%)
EBITDA	7,689	17.5%	6,617	17.6%	+16.2%	27,033	17.3%
Depreciation	(4,337)	(9.9%)	(3,312)	(8.8%)		(15,183)	(9.7%)
Gains/losses on fixed assets	8	0.0%	45	0.1%		46	0.0%
EBIT	3,360	7.7%	3,350	8.9%	+0.3%	11,896	7.6%
Net financial expense	(352)	(0.8%)	(232)	(0.6%)		(701)	(0.4%)
Exchange rate gains and losses	(816)	(1.9%)	(397)	(1.1%)		(1,380)	(0.9%)
Profits and losses from equity investments	-		-			(39)	(0.0%)
EBT	2,192	5.0%	2,721	7.2%	-19.4%	9,776	6.3%
Income taxes	(512)	(1.2%)	(565)	(1.5%)		407	0.3%
PROFIT FOR THE YEAR	1,680	5.0%	2,156	5.7%	-22.1%	10,183	6.5%
Minority interests	(133)	(0.3%)	(41)	(0.1%)		(268)	-0.2%
PROFIT ATTRIBUTABLE TO THE GROUP	1,547	3.5%	2,115	5.6%	-26.9%	9,915	6.4%

Performance data Sales by market

€ x 000	I Q 2020	I Q 2019*
Italy	8,470	8,852	3% -4
Western Europe	2,544	3,409	-25 4%
Eastern Europe (incl. Turkey)	16,671	11,964	3% +39
Middle East & Africa	2,322	1,258	6% +84
Asia (excl. ME)	1,524	1,914	-20 4%
Latin America	6,778	6,416	6% +5
North America	5,543	3,822	0% +45
Totale	43,852	37,635	+16 5%

€ x 000

Performance data Sales by product

€ x 000	I Q 2020	I Q 2019*
Gas parts	30,722	32,591	7% -5
Hinges	9,931	2,768	+258 8%
Electronic components	3,199	2,276	6% +40
Totale	43,852	37,635	5% +16

€ x 000

Performance data Ebitda bridge IQ 2020 vs. IQ 2019

12,000 12.000 12.000 12,000	17.6%		-1.6%	+0.9%	-0.2%	+1.0%	+0.1%	-0.3%	17.5%	+2.3%	19.8%
11,000 11.000 11,000 11.000										10.063 10,063 10.063 10.063 10,063 10,063	10,063 10,063
10,000 10.000 10,000 10.000
9,000 9.000 9,000 9.000								7.689 7,689	7,689 7.689
8,000 8.000 8,000 8.000	6.617 6,617	6,617 6.617		7.057 7,057	7.057 7,057	7,001 7.001		7.689 7,689	7.689 7,689
7,000 7.000 7,000 7.000	6.617 6,617	6.617 6,617	6,407 6.407 6.407 6,407 6.181 6,181	6,181	6.125 6,181 7.001	6,437 6.125	6,481 6.481 6.437 6,481	6,481 6.481		7,689 7,689 7,689 7.689
6,000 6,000 6.000 6.000		6.407 6,407 6.407 6,407		6.181 6,181	7,001 6.181	6.437 6,437 6.437 6,125	6.437 6,437 6.481 6,437	6,481 6,481 6.481
5,000 5,000 5.000 5.000			5.836 5.836 5,836 5,836 5,836 5.836	5.836 5,836	6,125
4,000 4,000 4.000 4.000	6,617 6,617	(210) (210)	(571) (571)	345 345 876	(56) (56)	312 (564)	44 44	1,208 6,481 1,208	7,689 7,689 7,689	2,374 2,374 2,374	10,063 10,063
3,000 3.000 3,000 3.000
2,000 2.000 2,000 2.000
1,000 1.000 1,000 1.000											0
0 0 0

Performance data Balance Sheet

€ x 000	I Q 2020	I Q 2019	FY 2019
Fixed assets	134,108	118,200	138,506
Inventories	34 080	37 676	35 343
Trade receivables	, 53 136 ,	, 44 769 ,	, 46 929 ,
receivables Tax	3 067 ,	3 438 ,	4 458 ,
Other receivables current	2 694 ,	1 776 ,	1 459 ,
Trade payables	(26 558) ,	(20 746) ,	(27 560) ,
Tax payables	(1 617) ,	(2 768) ,	(1 802) ,
Other payables	(9 076) ,	(7 055) ,	(9 134) ,
Net working capital	55,726	57,090	49,693
Provisions for risks and severance indemnity	(11 751) ,	(6 402) ,	(11 966) ,
Capital Employed	178,083	168,888	176,233
Equity	117,545	120,395	121,105
Net debt	60,538	48,493	55,128
Sources of finance	178,083	168,888	176,233

	I Q 2020	I Q2019	FY 2019
Liquidity and current financial assets	(14,189)	(12,538)	(19,954)
Current financial debt financial debt Non-current	24 365 , 50 362 ,	17 578 , 43 453 ,	23 652 , 51 430 ,
Financial debt	74,727	61,031	75,082
NET FINANCIAL POSITION	60,538	48,493	55,128

	I Q 2020	I Q2019	FY 2019
Unsecured loans	54,354	54,069	55,222
Short-term bank liabilities	4,138	2,453	3,689
Leases out of IFRS 16 scope	1,270	1,423	1,309
Other financial debts	1,293	180	1,293
Put Options	10,350	1,818	10,350
IFRS 16 leases	3,322	1,088	3,219
Financial debt	74,727	61,031	75,082

Performance data Cash flow statement

€ x 000	I Q 2020	I Q 2019	FY 2019
Cash at the beginning of the period	18,687	13,426	13,426
Net profit Depreciation Other income statement adjustments	1,680 4,337 1,116	2,156 3,312 1,004	10,183 15,183 1,538
Change in net working capital - Change in inventories - Change in receivables - Change in payables	1,263 (6,207) (902) (5,846)	2,163 1,503 (469) 3,197	9,090 10,148 (2,901) 16,337
Other changes in operating items	(1,041)	(1,754)	(2,309)
Operating cash flow	246	7,915	40,932
Investments, net of disposals	(3,339)	(1,616)	(12,014)
Free Cash Flow	(3,093)	6,299	28,918
Cash flow from financial activity Own shares buyback Dividends CMI Acquisition OKIDA acquisition Forex	(991) (722) - - - (925)	(7,066) - - - (317) 136	(10,433) 3,146 (6,060) (10,475) (317) 482
Net financial flow	(5,731)	(948)	5,261
Cash at the end of the period	12,956	12,478	18,687
Current financial debt Non-current financial debt	23,132 50,362	17,518 43,453	22,386 51,430
Net financial debt	60,538	48,493	55,130

Inventories:

• remain at physiological levels, after the recent interventions that made it possible to optimize logistics management

Trade receivables:

• higher sales in the period compared with the end of 2019
• average days for collection have not increased significantly

Trade payables:

• Sabaf Group committed to strict compliance with previously agreed payment terms

Mainly allocated to new global projects in start-up with some large customers

Performance data Financial Indicators

			FY 2019
	I Q 2020	I Q 2019*	reported	pro-forma**
Change in turnover (vs period of previous year) . same	+16.5%	-2.3%	+3.5%	-8.9%
ROCE (return on capital employed)	7.5%	7.9%	6.8%	7.1%
Net debt/EBITDA	1.97	1.83	2.04	1.86
Net working capital/Turnover	32%	38%	32%	29%
Net deb/equity	52%	40%		46%
Days of Sales Outstanding	109	107	108	97
Days of Payables Outstanding	89	86	114	90
Days of Inventory Outstanding	82	107	96	74

• * C.M.I. Group has been consolidated from August 2019
• ** The change in pro-forma turnover is calculated taking into consideration the same scope of consolidation. The return on capital employed and the pro-forma net debt/EBITDA ratio are calculated considering, for the companies acquired and included in the scope of consolidation during the year, the EBIT and EBITDA for the entire year

Outlook 2020

In many of the main markets, demand and production levels have been strongly impacted by restrictions imposed by local authorities leading to postponement or cancellation of orders by customers.

In April, sales fell by 18% (30% taking into consideration the same scope of consolidation), while a partial recovery is expected as early as May.

Based on the information currently available, the Group expects to close the first half of the year with sales of between € 78 and € 82 million (up 4% - 9% compared with the first half of 2019).

For the rest of the year, visibility is still extremely limited. In the absence of events that would have a further lasting impact on consumption in its main target markets, the Group expects a gradual recovery with sales in the second half of the year higher or, in the worst-case scenario, in line with those of the first half.

The Group believes that the strategy aimed at strengthening its international presence remains valid and has therefore not deemed it appropriate to revise the plan of organic investments for the current year, although some investments will be delayed due to current restrictions on mobility.

BUSINESS PLAN 2018 – 2022

Business plan 2018 - 2022 Where we are 1/2

Business plan 2018 - 2022 Where we are 2/2

	projects	projects	annual sales	Period		Markets
Burners and valves	31	6	15 - 18 mn €	2019 - 2021	2022	North America, Europe, South America. Far East
Electronic components	48	30	4 - 6 mn €	2019 - 2021	2022	Europe and Middle East, South and Nord America (new markets)
Hinges	19	9	3 - 4 mn €	2019 - 2021	2022	Europe
Total	9 8	4 5	22 - 28 mn €

COVID-19 All main projects are confirmed

Estimated delay of about 6 months

Basis for organic growth in the near future

DISCLAIMER

Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.

The Company's business is in the domestic appliance industry, with special reference to the gas cooking sector, and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting this business. Forwardlooking statements with regard to the Group's business involve a number of important factors that are subject to change, including: the many interrelated factors that affect consumer confidence and worldwide demand for durable goods; general economic conditions in the Group's markets; actions of competitors; commodity prices; interest rates and currency exchange rates; political and civil unrest; and other risks and uncertainties.

Pursuant to Article 154/2, paragraph 2 of the Italian Consolidated Finance Act (Testo Unico della Finanza), the company's Financial Reporting Officer Gianluca Beschi declares that the financial disclosure contained in this financial presentation corresponds to the company's records, books and accounting entries.

For further information, please contact

Gianluca Beschi - +39.030.6843236 gianluca.beschi@sabaf.it